Makeevskoye-16 (“M-16”) well in Ukraine has commenced drilling

Makeevskoye-16 (“M-16”) well in Ukraine has commenced drilling

Kulczyk Oil Ventures Inc. (“Kulczyk Oil”, “KOV” or the “Company”), an international upstream oil and gas exploration and production company, is pleased to advise that the Makeevskoye-16 (“M-16”) well in Ukraine has commenced drilling. The spud of the M-16 well, which is being drilled as part of the accelerated 2012 drilling program, marks the first time that the Company has had two drilling rigs operating simultaneously on its Ukraine properties. The M-16 well, is operated by KUB-Gas LLC (“KUB-Gas”), a subsidiary in which KOV has a 70% effective ownership interest, and will be the deepest well drilled to date by KUB-Gas.
Makeevskoye-16
The M-16 well has a projected total depth (“TD”) of 3,850 metres and is expected to take approximately 90 days to reach TD. The well will target a prospect with multiple potential reservoir units in sediments of Carboniferous age. The upper portion will be an appraisal well targeting a structure defined by 3D seismic with stacked reservoir units in the Bashkirian and Upper Serpukhovian that tested natural gas elsewhere within the Makeevskoye field. The deeper portion will be an exploration well crossing a fault to test a deep structure on a downthrown fault block to evaluate the hydrocarbon potential of deeper formations in the Lower Serpukhovian and potentially in the Visean. A discovery in these deeper sediments would open up new opportunities for reserve and production growth. The M-16 well is located 6.7 kilometres to the northwest of the Makeevskoye-21 well which was drilled and cased as a potential gas producer in the first quarter of 2012 and put on production at an initial rate of 1.7 million cubic feet per day (“MMcf/d”) (1.2 MMcf/d net to KOV) in early August, 2012.
Contingent Resources of natural gas (net to the 70% interest of KOV) for the Bashkirian and Upper Serpukhovian zones underlying the M-16 location, as evaluated by the Company’s third party engineering consultants and as arithmetically totalled by the Company, range between a Low Estimate (1C) of 9 billion cubic feet (“Bcf”) and a High Estimate (3C) of 92 Bcf with a Best Estimate (2C) of 38 Bcf when rounded to the nearest Bcf.
In addition, Prospective Resources of natural gas (net to the 70% interest of KOV) for the Lower Serpukhovian zone in the M-16 prospect, as evaluated by the Company’s third party engineering consultants and as arithmetically totalled by the Company, range between a Low Estimate (1C) of 11 Bcf and a High Estimate (3C) of 94 Bcf with a Best Estimate (2C) of 41 Bcf when rounded to the nearest Bcf.
Jock Graham, Executive Vice President of the Company says: “The contracting of a second drilling rig to accelerate the 2012 drilling program is a reflection of the Company’s optimism regarding the potential upside in our business in Ukraine. In particular the M-16 well, with a target depth of 3,850 metres, will be the deepest well drilled to date by KUB-Gas. The M-16 well is an exciting well which will test a new structure and new target horizons. It will not only be targeting formations that are currently producing within the Makeevskoye field but will also target deeper formations, which have not been produced from the Company’s license areas, potentially opening up new opportunities for reserve and production growth.”
On 26 June 2012 KOV announced that KUB-Gas would drill the M-16 well using Ukrburservice Rig#1, a 2,000 horsepower National Oilwell Varco (“NOV”) drilling rig manufactured in Canada in 2010. Ukrburservice Rig#1 has a lifting capacity of 450 metric tonnes and a depth rating of 7,000 metres. The KUB-Gas owned NOV rig, manufactured in Canada in 2007 with a lifting capacity of 200 metric tonnes and a depth rating of 3,050 metres, is currently on the Makeevskoye-20 location preparing to test the R8 zone prior to moving to the Krutogorovskoye-7 location in late August.
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